Grow and Protect Your Business

Buy/ Sell Agreement Series: Part 3- Is Your Buy-Sell Agreement Current?

The business continuity agreement is the single most important document that the owners of a closely held business will ever sign. This agreement (also known as a buy-and-sell or buy-sell agreement) controls the transfer of ownership when certain events occur. These events include: the death or disability of a shareholder, an involuntary termination or retirement of a shareholder and even (yes they do happen) disputes among owners.

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Buy/Sell Agreement Series: Part 1- Do You Really Need A Buy/ Sell Agreement?

In our last issue of this Newsletter, we discussed the problems that can arise if a business continuity (buy/sell) agreement designed for one event (usually the death of a shareholder) is called upon to manage the more likely event of a shareholder’s departure during his or her lifetime. Lifetime departures may occur due to the retirement, termination, divorce or bankruptcy of an owner.While it is true that poor design or failure to update the agreement—especially in tough economic times—can create significant problems, does that mean you and your co-owners shouldn’t have one in place?In a word, NO! The business continuity agreement may be one of the most important documents that you, as a co-owner of a closely held business, will ever sign. For an idea of why, consider the case of Acme, a fictional company.George Acme’s son-in-law, Tom Gardner, had worked for George for over 20 years. Tom had gradually assumed operational management and was the acting CEO. In recognition of Tom’s contribution, George had sold Tom—mostly at a low value—25 percent of the company.Everyone expected that Tom would one day own Acme, Inc. But before that day arrived, George died and Tom’s sister-in-law became the executor of George’s estate. […]

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Characteristics For Your Bonus Incentive Plans

Too often, owners only discover that the compensation plans they’ve put in place for key employees are sadly inadequate when those key employees leave their companies for greener pastures. The departure of one or more of these key employees not only complicates your daily business life, but it can slam shut the door on your exit plans. Without experienced management in place, you may find it very difficult (if not impossible) to leave your business in style.

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Set Your Exit Objectives… Even If You Are Not Ready To Exit

Remember Peter Daniels, our perennial procrastinator?

In 2005 Peter Daniels wanted to leave his food processing plant in five years by selling it for enough cash to maintain a comfortable lifestyle. A quick review of the company’s financials suggested that with a current annual cash flow of $250,000, before his salary of $250,000, the company would be valued around $1 million. Peter’s advisor suggested creating and implementing a step-by-step roadmap to increase value, minimize taxes, and protect existing value from loss, and Peter agreed, but did nothing more. Peter never designed an exit plan nor did he ever implement one.

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Quotes That Count

The Universal Truth is that every owner will exit their business…
The Question is on whose terms: Circumstance, Others,… or Yours?